'Committed to negotiating broader US-India BTA': FM Nirmala Sitharaman hails trade deal

US-India Interim Trade Framework Takes Shape

In a significant development for global trade, the United States and India have announced a framework for an Interim Agreement aimed at reciprocal and mutually beneficial trade. This pact serves as a crucial stepping stone toward negotiating a comprehensive Bilateral Trade Agreement, or BTA, which was initially launched under President Donald J. Trump's administration. Finance Minister Nirmala Sitharaman has publicly hailed the deal, emphasizing India's firm commitment to advancing these broader negotiations. The framework addresses key issues like tariff reductions and market access, signaling a thaw in recent trade tensions between the two largest democracies.

Tariff Cuts and Market Openings Boost Exports

The agreement brings immediate relief for Indian exporters by slashing US reciprocal duties on Indian goods from nearly 50 percent to 18 percent. This reduction follows the rollback of additional levies imposed last year over India's purchases of Russian crude oil, which had strained relations. Labour-intensive sectors in India, including textiles, apparel, leather goods, footwear, plastics, rubber products, organic chemicals, home decor, handicrafts, and certain machinery, stand to gain the most. These industries will benefit from improved price competitiveness, potentially leading to larger orders from American buyers and job creation back home.

On the flip side, India has agreed to eliminate or reduce tariffs on a range of US industrial goods, agricultural products, and food items. This includes animal feed, tree nuts, fruits, soybean oil, wine, and spirits, with some duties removed outright and others phased in gradually. Trade Minister Piyush Goyal highlighted that these concessions are selective, protecting domestic industries while opening doors for balanced growth. Notably, India's core agricultural red lines remain intact—no genetically modified products from the US will enter the market.

Massive Commitments and Future Cooperation

A standout feature of the deal is India's intention to purchase $500 billion worth of US goods over the next five years. This ambitious procurement covers energy products, aircraft and parts, precious metals, technology items like Graphics Processing Units for data centers, and coking coal. Such commitments underscore efforts to balance trade flows and deepen commercial ties. Both nations also pledge to tackle non-tariff barriers in areas like medical devices, ICT goods, and agriculture, while fostering cooperation on digital trade rules, supply chain resilience, and investment reviews.

"This interim framework is a calibrated win for India's farmers, pharma sector, MSMEs, and startups, providing zero-duty access to the US market for key exports like tea, spices, pharmaceuticals, and smartphones, all while safeguarding our sensitive sectors," Trade Minister Piyush Goyal stated at a press conference.

The pact also promotes joint technology cooperation and addresses discriminatory practices in digital trade, paving the way for ambitious rules in the full BTA. For Indian exports, zero additional tariffs now apply to pharmaceuticals valued at $13 billion, smartphones, and various agricultural products such as tea, spices, coffee, and exotic fruits like mangoes and pineapples. These measures position India competitively against rivals like China, Bangladesh, and Vietnam.

This interim trade framework marks a pivotal moment in US-India relations, reducing tariffs to 18 percent on Indian goods, enabling $500 billion in US purchases by India, and recommitting both sides to a comprehensive BTA. It balances market access with protections for domestic interests, promising growth in key sectors amid optimistic statements from leaders like Finance Minister Nirmala Sitharaman and Trade Minister Piyush Goyal.